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How Are the Interest Rates Set for My Fixed Deferred Annuity?

During the accumulation period, your money (less any applicable charges) earns interest at
rates that change from time to time.  Usually, what these rates will be is entirely up to the
insurance company.

Current Interest Rate

The current rate is the rate the company decides to credit to your contract at a particular
time.  The company will guarantee it will not change for some time period.

• The initial rate is an interest rate the insurance company may credit for a set period of time
after you first buy your annuity. The initial rate in some contracts may be higher than it will be later. This is often called a bonus rate.

• The renewal rate is the rate credited by the company after the end of the set time period.
The contract tells how the company will set the renewal rate, which may be tied to an
external reference or index.

Minimum Guaranteed Rate

The minimum guaranteed interest rate is the lowest rate your annuity will earn.  This rate is
stated in the contract.

Multiple Interest Rates

Some annuity contracts apply different interest rates to each premium you pay or to premiums you pay during different time periods.  Other annuity contracts may have two or more accumulated values that fund different benefit options.  These accumulated values may use different interest rates.  You get only one of the accumulated values depending on which
benefit you choose.


– National Association of Insurance Commissioners.

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